The purpose of this article is to describe the top utility strategies for successful business attraction, retention and expansion efforts.

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CATALYST
C O N S U L T I N G L L C
TOP UTILITY STRATEGIES FOR
SUCCESSFUL ECONOMIC DEVELOPMENT
By John Wolfram
ccording to recent reports, economic development and site selection consultants believe
the U.S. economy is already on a continuous growth track, which is reflected in the new
facility and expansion plans of their clients.1
If utilities adopt a creative economic
development strategy, they can accelerate the success of such growth through regional attraction,
retention, and expansion efforts.
Utilities play a significant role in economic growth. Expansion of commercial and industrial
business can result in increases in energy consumption, and is often also directly related to the
extension of utility infrastructure. Under traditional rate regulation, utilities benefit from
increasing production, transmission or distribution infrastructure, by increasing the rate base
upon which the utility has an opportunity to earn a fair rate of return; thus the utility has an
economic incentive to support commercial and industrial growth in the service territory.
Utilities can support economic growth in many ways. Historically, the primary requirement was
to provide reliable service at low cost. However, in the current economic climate, power quality
and price alone are not enough to fully support the attraction, retention and expansion of
commercial and industrial enterprises. To be a leader in economic development, the utility must
do more.
To reach the next level, the utility must formulate a comprehensive Economic Development
Strategic Plan. Such a strategic plan should recognize and even capitalize on certain
fundamental facts about economic development and the political domain in which it operates.
Successful strategies will also remove the limitations that were essentially self-imposed over the
years by utilities – i.e. anything that falls under the “we’ve never done that before” umbrella --
and encourage the utility to assist new enterprises in ways that reflect a genuine, unlimited
partnership. This partnership should be a relationship not constrained to issues of power quality
and price, but unbounded and centered on helping the new business in any way possible to
decide to locate its new facility or expand within the utility service territory.
The purpose of this paper is to describe the top utility strategies for successful attraction,
retention, and expansion efforts. Utilities that develop creative approaches for supporting
business attraction efforts will reap both financial and public relations rewards. Utilities
implementing these comprehensive strategic plans with specific tactical steps can be positioned
to optimize public relations advantages and, more importantly, to help enhance and protect the
revenue streams from large customers.
1
Area Development Magazine, 11th Annual Consultants Survey: Consultants’ Exhibit Confidence and Increasing
Project Activity, Special Presentation (Q1 2015), at www.areadevelopment.com
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Utility Economic Development in Context
Before a strategic plan can be formulated in detail, the overall role of the utility in the business
attraction effort must be placed in the appropriate context. The paradigm for economic
development for utilities – including both the attraction and retention of significant business
enterprises – is comprised of political, regulatory, and financial components. These three facets
of utility economic development are highly interdependent. All three elements are critical to the
formulation of a sound strategy.
In most areas of the U.S., a state or local government agency is officially tasked with leading
business attraction efforts for a particular community. This agency -- referred to here as the
economic development official -- establishes collaborative relationships with all of the parties
that can impact a business attraction or retention initiative. The parties include other branches of
government, businesses dealing with utility service or transportation, and other relevant civic or
business coalitions. The economic development official takes the lead role when working with a
business and with the consultants retained for major plant location or re-location exercises. The
utility sometimes has direct interaction with the business or the consultant, but more often than
not, the economic development official manages all communications very closely as part of its
leadership role.
A Seat at the Table
Utilities are but one participant in a process that usually involves many parties. These include
elected officials, economic development officials and coalitions (including all of the groups
formally working to advance a prosperous economy in a region), port authorities, other utilities
(including water, sewer, telecommunications), state or local revenue cabinets, environmental
agencies, railroads, commercial real estate developers, universities, and others.
Public relations are the root of successful utility economic development. To be effective in the
process, the utility must be viewed by all entities -- including the potential new customer -- as a
committed partner, willing to do whatever it can to help all of the parties succeed in attracting
and retaining the customer.
In the recruiting stage, economic development officials offer appealing incentive packages to
lure companies to their communities. They pledge tax breaks, real estate deals, low interest
loans, job training funds, or other benefits to attract new employers. The utility typically assists
in this effort by offering an incentive rate (usually in the form of reduced demand charges, or in
the form of reduced up-front costs for transmission or distribution interconnections). When
comparing these offers, however, the bottom line is only one factor for the new business to
consider. Of more importance is whether the new enterprise believes that the community – and
the utility – will be committed to delivering on those promises after a deal is announced.
With this in mind, the utility should staff its economic development team with qualified experts--
preferably with certified economic development professionals. Doing so not only demonstrates
that the utility staff members have the breadth of knowledge to perform at the top level in the

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profession, but also enhances the visibility of the utility relative to other competitors for
attraction and expansion opportunities.
The utility is well advised to capitalize on the public relations nature of these activities, by
staffing project teams with all of the experts whose skills support the effort. In this way the
utility economic development professionals leading the team have the support of subject matter
experts from all across the utility throughout the entire effort.
Site Selection Drivers
Even though the utility has an important seat at the recruitment table, it should also acknowledge
that factors other than energy normally drive site selection.
Year after year, energy costs and availability are recognized as significant drivers by firms in the
site selection process, but they are usually outweighed by other factors including cost and
availability of skilled labor, state and local incentives, tax exemptions, and accessibility to
highways, airports, or major markets. See Table 1. Thus the utility should recognize the true
nature of the site selection process -- which is, in its most basic form, a site selection contest
between competing cities, states, utilities, and other service providers – and avoid overestimating
the influence that any special utility offerings will have on the customer's ultimate decision.
Table 1.
Site Selection Drivers
1) Highway Accessibility 11) Available Buildings
2) Availability of Skilled Labor 12) Corporate Tax Rate
2) Labor Costs 12) Accessibility to Major Airport
4) Expedited Permitting 14) Proximity to Suppliers
5) Available Land 15) Training Programs
5) State and Local Incentives 16) Low Union Profile
7) Energy Availability & Costs 17) Environmental Regulations
8) Proximity to Major Markets 18) In/Out Shipping Costs
9) Occupancy/Construction Costs 19) Right-to-Work State
9) Tax Exemptions 20) Railroad Service
Source: Area Development Magazine, 2014 Consultant Survey, Chart W, Q1 2015.
Alignment & Analytics
Any utility plan to attract business can only succeed if it aligns with the central corporate
objectives and plans of the organization. The utility must ensure that its economic development
strategy and tactics are consistent with the primary initiatives, brand management, and marketing
that the utility undertakes, now and in the future. It must also align with the utility plans for
investment in new production, transmission, and/or distribution facilities.

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The commitment of the utility to economic development initiatives must be reflected in the
financial forecast. As is the case for most initiatives, funding for the tactics that support the
strategy must be sufficient to ensure success. A plan for supporting economic development will
not succeed if the utility lacks the resources to execute it.
The strategy should also consider the importance of analytics. Analysis of relevant data is
essential to understanding and prioritizing any utility-driven efforts. The tactics would include
analysis of the following:
 Key Drivers, Metrics, & Benchmarking
 Existing Customers & Profitability
 Emerging Sectors & Waning Industries
 Site Availability & Certification
 Ratemaking Impacts
 Legislative Trends
 Internal & External Forecasts
 Utility Expansion Capabilities & Plans
Analysis may also include other assessments coupled with longstanding utility metrics, budgets,
plans or analyses (including load forecasts, regulatory filings, integrated resource plans, system
expansion plans, substation upgrade planning, or other emerging strategic initiatives). The
budget should then include planned expenditures for internal analytic resources or funding for
third party experts to conduct these analyses.
Partnership & Promotion
The utility should consider the importance of partnership. Partnering with external entities is an
important component of successful economic development. The public relations value of
partnering with business and government leaders on economic development cannot be
overstated. Creating and maintaining strong relationships with state and local economic
development groups, elected officials, and business leaders are necessary for success. The
financial forecast should include funding of external affairs personnel and economic
development professionals -- and a budget for those individuals to travel or attend events as
needed.
The strategy should consider the importance of promotion. Promotional activities are coupled
with partnerships and are also an important element of the overall strategy because of the role
that developers, site consultants, and other third parties play in project evaluation and site
selection. Boosting awareness of the advantages of the utility assists in the traditional project
attraction process, and hosting or sponsoring promotional events for the participants in the site
selection process provides a benefit to the utility. If the utility tactics include sponsorship of
promotional events, the budget must include funding of sufficient magnitude to properly plan
and run the event, and to conduct any follow-up initiatives that are needed to pursue leads or to
advance promising new relationships.

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Furthermore, many state and local governments no longer have the funding to support their
attraction efforts like they did in decades past. Economic development officials used to sponsor
conferences, recreational outings, or other promotional events for developers, site consultants,
lenders, and other third parties involved in project evaluation and site selection. These events
provided an opportunity for networking and for promoting the advantages of locating a business
in the region. When the public budgets for these events disappeared, many utilities stepped in to
sponsor or host similar events in order to maintain corporate awareness of the service territory.
Promotional events are yet another way that utilities can provide creative support for economic
development, not for a particular prospect but for the region at large. Sponsoring such events
also enhances the relationship that the utility enjoys with many of the parties to the economic
development process noted earlier.
Leverage Utility Strengths
Because of the importance of good public relations, and because the impact of energy cost and
availability is somewhat limited, the utility must provide assistance beyond the conventional
boundaries of power quality and price. The utility that seeks to provide unbounded value to the
new enterprise -- providing assistance in any way possible to help drive the enterprise to locate
its new or expanded facility in the utility service territory – will be more likely to effectuate
positive outcomes.
In many ways the utility is uniquely positioned to assist the new business. Utility companies are
themselves large-scale organizations with first-hand experience in many areas that the new
business may share. Utility expertise in right of way, environmental assessments, information
technology, asset management, mapping, transportation, telecommunications, and procurement
can be helpful to particular industries considering a site in the service territory. The expertise of
the utility’s economic development team can unlock doors that simply cannot be opened directly
by the economic development official or any other participants in the process.
Utilities have recently undertaken several initiatives that leverage utility strengths in support of
attraction, retention, and expansion. Some examples include the following:
 Provide leadership to state and local organizations
 Lead site certification initiatives
 Host educational forums with community partners
 Host “Select Us” seminars
 Improve web-based information interface
 Utilize social media
 Update industry reports and publications
 Prepare environmental assessments
 Offer discount or incentive rates (including Economic Development Rates and Load
Retention Rates)
 Offer Green Source or Renewable Energy options
 Assist with LEED certification for energy efficient buildings
 Offer a “re-occupancy” incentive rate (also known as a “Brownfield” tariff)

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 Offer discounts or extended pay-back for infrastructure (including redundant feeds or
enhanced system protection schemes)
 Offer coordination and support for on-site generation
 Assist with compliance with EPA guidelines
 Offer loan programs
These or other creative steps could become key factors that separate a utility and its site from the
rest of the field in the site selection contest.
Conclusion
During economic recovery periods, it is as important as ever for electric and gas utilities to
formulate comprehensive economic development strategic plans. Recognizing that the paradigm
for utility economic development is comprised of political, regulatory, and financial elements,
utilities that capitalize on these facts and develop novel approaches for supporting business
attraction efforts will reap both financial and public relations rewards.
Site selection for commercial or industrial facilities is a contest, and the utility must compete
along with other political and commercial players. The utility with a successful economic
development strategy will recognize that reliable and economic energy offerings have only a
limited impact on the recruitment effort, and will augment such offerings by becoming a genuine
partner with the new enterprise -- and with economic development officials -- through the
provision of creative assistance beyond the boundaries of the historic utility norms.
Utilities implementing comprehensive economic development strategies with specific tactical
steps, including the provision of incentive rate offerings, can be positioned to achieve sustained
success in attraction, retention and expansion efforts for the regional economy.
John Wolfram is the founder of Catalyst Consulting LLC, a consulting firm specializing in rate and
regulatory matters for utilities. Contact the author by phone at 502.599.1739 or by e-mail at
johnwolfram@catalystcllc.com. See other articles at www.catalystcllc.com
© 2015 Catalyst Consulting LLC